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The Comeback of the Swiss Watch Industry on the World Market: A Business History of the Swatch Group (1983-2010)

JSME Vol 8: Issue 2, 2012

Author(s): Pierre-Yves Donzé (Kyoto University, Japan)

Abstract:
This article offers a study of the sources of competitiveness for firms in the fashion and luxury goods industry. It focuses on Swatch Group, the world’s biggest watch company, using a business history approach. Whereas most researchers give priority to marketing strategies when explaining the success of European luxury and fashion companies, this papers argues that production strategies also play a key role and must be taken into consideration. The detailed analysis of the sources for Swatch Group’s competitiveness since its founding in 1983 makes it possible to highlight the importance of two main complementary strategies for supporting its growth: first, supply-chain management strategy (rationalization and globalization of production) to cut production costs; and second, rebranding strategy (shift to luxury and tradition). This case study shows that cost competition still matters in industries with high value-added and maintains that the product development strategy in this industry is more about marketing than product innovation, as product rebranding is more important than technical innovation per se.

Keywords: Watch Industry; Switzerland; Swatch Group; Luxury Goods; Marketing Strategy

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